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BPL PPT Updated Final (1)
- 1. Kathleen Tripp FeliciaAlli Sadia Ahmed Jian Li Sangmin Leeab ADVERTISING INDUSTRY Company B
- 2. AGENDA • Industry Overview •Dentsu • Publicis • Havas • Conclusion
- 3. ADVERTISING AGENCIES • ThePrimary activities of this industry are: Creating advertising campaigns Providing media buying services Disseminating advertising campaigns through available mediums Providing advertising services, including for indoor and outdoor displays • The major products and services in this industry are: Campaign planning and management Advertisement placement Creative services and production
- 4. INDUSTRY OVERVIEW Global AdvertisingAgencies • Total Industry Revenue = $271.5 billion • Past 5 year Average Annual Revenue Growth = 4.7% • Projected 5 year Average Annual Revenue Growth = 3.1% • Estimated Revenue in 2020 = $317 billion
- 5. 0.00 50,000.00 100,000.00 150,000.00 200,000.00 250,000.00 300,000.00 2010 2011 20122013 2014 2015 Gloabl Advertising Agencies Industry Revenue (In Millions) Global Revenue GLOBAL AGENCIES
- 6. • Total IndustryRevenue = $52.1 billion • Past 5 year Average Annual Revenue Growth = 5.2 % • Projected 5 year Average Annual Revenue Growth = 3.1% • Estimated Revenue in 2020 = $60.8 billion U.S. AGENCIES
- 7. 0.00 10,000.00 20,000.00 30,000.00 40,000.00 50,000.00 60,000.00 2010 2011 20122013 2014 2015 Advertising Agencies US Revenue (In Millions) US Revenue U.S. AGENCIES
- 8. EXTERNAL ENVIRONMENTAL DRIVERS •Global advertising expenditure • Global per capita income • GDP of the BRIC nations • Global consumer spending • Global investor confidence
- 9. INDUSTRY GROWTH • OverallGlobal Advertising Agencies Industry = Mature • 3 primary reasons for the industry being mature • Industry Life Cycle: Mature = United States and Western Europe Rapid Growth = China, Latin America, Africa, the Middle East, Russia, and India
- 10. TECHNOLOGICAL CHANGE: DIGITAL •Consumer focus is on social media and the internet • Opportunity in digital media advertising • Digital Advertising Revenue 2010: 13% • Digital Advertising Revenue 2015: 21.6%
- 11. EASE OF ENTRY •The barriers to the industry = Medium • Little capital investment is required • Assets = People • No explicit governmental barriers to entry • Regulations on certain types of advertising in specific countries
- 12. EASE OF ENTRY •Acquisitions have created large global firms • Difficult for entrants into the industry to compete for large clients
- 13. COMPETITIVE RIVALRY • Competition= High • Large number of firms ranging from fully-integrated, international entities to small, niche and local agencies • Compete based on product differentiation or cost leadership • Increased competition for the online advertising market
- 14. TV, 40.10% Internet, 21.60% Newspapers,17.90% Magazines, 8.30% Radio, 4.60% Outdoor, 6.40% Cinema, 0.50% Estimated Share of ad spent in 2015 TV Internet Newspapers Magazines Radio Outdoor Cinema COMPETITIVE SEGMENTS
- 15. SUPPLIER SEGMENT • SupplierPower = Medium • 4 major Supplier Industries • Suppliers are industry independent • Premium Ad space is limited • Supply is less than demand • Forward integration
- 16. BUYER SEGMENT • BuyerPower = Medium • 7 major Buyer Industries • Buyers can switch advertising agencies easily • Large buyers can demand concessions • Market has many suppliers to choose from • Backward integration
- 17. INDUSTRY FAVORABLENESS • Barriersto Entry = Medium • Competitive Rivalry = High • Threat of Substitution = Low • Supplier Power = Medium • Buyer Power = Medium
- 19. OVERVIEW • Dentsu anAdvertising company founded in 1901. Based in Tokyo, Japan • Dentsu offers Advertising, office rental, building maintenance, and fiduciary services
- 20. PRODUCTS & SERVICES Marketing Design/ Strategic Solutions Communication DesignPromotions Digital and Social Media
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- 23. CORPORATE PHILOS0PHY Ideas thatreach beyond the imaginable. Technology that crosses the bounds of possibilities. Entrepreneurship that surpasses the expected. Three sources of strength, driving our innovation bringing positive change to people and society. Slogan: Good Innovation!
- 24. STRATEGY: DIVERSIFYING • Diversifyingthe portfolio on a global basis. • Organic growth rate of 10.3% that far exceeds their competitors. Nearly doubles the competitors growth rate.
- 25. STRATEGY: EXPANDING • Evolvingand expanding in the digital domain by aggressive M&As • Total of 11 acquisitions in the 2014 fiscal year
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- 30. FINANCIAL STRENGTH • Long-termdebt: AA- • Short-term debt: A-1+ Ratings from Rating and Investment information. Inc. (R&I)
- 31. SWOT Strengths Weaknesses Opportunities Threats •Strong recognition • Broad portfolio of services • Diversified end markets • Geographic concentration • Expansion through strategic acquisitions • Digital/ social media growth • Global competition • Regulations in advertising and communications industry
- 33. Publicis Groupe isa French multinational advertising and public relations company, specializing in Marketing, Communications and Business Transformation. • Founded in 1926 by Marcel Bleustein-Blanchet • 3rd largest Global Advertising • Headquartered in Paris, France • Consists of 1,321 agencies throughout 6 regions • Operates 108 offices worldwide • 75,000 employees globally OVERVIEW Publicis Groupe Global Main Brands and Subsidiaries
- 34. Branding and Identity Consumer Insights Design DigitalMarketing Public Relations Media Planning and Buying Marketing Research Relationship Marketing PRODUCTS & SERVICES
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- 36. Publicis Groupe describesthemselves as the global leader in marketing, communication and business transformation. To be the world leader in sustainable value creation through imaginative ideas and connections that build business with empowered people everywhere To move from a business leader to a business, marketing and transformation leader CORPORATE PHILOS0PHY Mission Vision
- 37. Publicis Groupe Targetby 2018 Increase Operating Margin to 17.3 to 19.3% Digital and Technology business to be 60% of revenue Faster organic growth +200% Current Operating Income 14.9% Current Digital 51.9% Current Organic Growth 4% STRATEGY
- 38. 2015 Total Revenue9M: Publicis Quarterly Review REVENUE
- 39. 2015 Total Revenue9M:Publicis Quarterly Review PRODUCT BREAKDOWN: REVENUE
- 40. 2015 Total Revenue9M: Publicis Quarterly Review Based on 2,854 Customers Representing 85% of the Customer base REVENUE BREAKDOWN: SECTOR
- 41. Analog vs. Digital Digitalis leading the industry in growth and innovation globally GROWTH BY REGION
- 42. STOCK PERFORMANCE PUB Stockprice closed at 59.70E, which is down from the 52 week of high of 60.23E
- 43. Earnings per share,minus costs of acquisitions Dividend growth +9.1% in 2014 STOCK PERFORMANCE
- 44. FINANCIAL STRENGTH Ratings fromRating and Investment information. Inc. (R&I) Moody’s Credit Rating: BAA2
- 45. 2015 YTD Revenue$9,334 $10,981 $7,311 2015 YTD Operating Expenses $8,048 $9,556 $6,214 Profit Margin $1,286 $1,426 $1,096 % of Profit Margin 13.7% 12.2% 14.9% October 2010 Share Price $774.18 $44.03 $62.11 October 2015 Share Price $1,544 $74.84 $84.53 % Change 99% 70% 36% COMPETITION
- 46. Competitor Comparison: “MediaPalooza”Results • In the last 6 months 20 clients were up for contract review with the worlds largest ad agencies • With 25 Billion up for review, it was dubbed “MediaPalooza” • With 60% of the reviews completed, Publicis Groups is performing above expectations • Publicis Groupe has been able to gain new business due to it’s digital capabilities COMPETITION
- 47. All of thefirms stakeholders have a critical position in the health of Publicis Group and its future. The company has set up a large team of employees and representatives to ensure the company’s health. Shareholders Employees Clients STAKEHOLDERS
- 48. Supervisory Board Committees Management Board Executive Committee Strategic Leadership Committee Group ofindividuals chosen by the stockholders to promote the best interests for the company through the governance of the company and to hire and supervise the executive directors and CEO The Board has established various committees to assist in discharging its duties. These include an Audit, Compensation, Appointment, Strategy and Risk Executive team and Directors of parent company, Publicis Group, including CEO, CFO COO Executive team, including CEO, President of Publicis Groupe Subsidiaries (i.e. Saatchi and Saatchi Company Leadership responsible for creating and executing strategic plans for company growth STRUCTURE & COMPOSITION
- 49. Publicis Groupe pridesitself on it’s beliefs and ideals and strives to live up to them everyday Have Passion for the work Believing in Mankind Living the True Blue Way Respect for the heritage the frames the future Inspire people to do great things BELIEFS & IDEALS
- 50. Transform into abusiness, marketing, communication transformation company • Publicis Group’s digital revenue to over 50% by 2015 and guide the way to 2018 target of 60% of all revenues from digital • The new platform of Publicis and Sapient creates a platform that is 22,000 strong • It creates a stronger and unique ability to handle global marketing campaigns • It will enhance the ability for Publicis to enter into strategic partnerships with companies like Facebook, Yahoo and Google This strategic move will position Publicis more competitively against it’s competition STRATEGY Publicis Acquisition of Sapient at the end of 2014 will create tremendous opportunity in the global advertising industry
- 51. • Publicis andFrench Telecom join forces with Irish Capital to create “Iris Next One” • Together, this will create a unique venture capital firm focused on investing in new business opportunities that will generate future growth for Publicis • Three strategies behind the joint venture • OP Ventures Growth will target established companies in France and Europe, providing up to 15 million euros per project to support new digital and advertising projects • OP Ventures Global will invest in start-ups outside Europe, also with funds of up to 15 million euros per project. • OP Ventures Early Stage will provide seed-capital and early-stage investment of up to 3 million euros to young companies in France and Europe. STRATEGY
- 52. • Recent acquisitionsare strengthening Publicis position in the marketplace • Making moves to focus on where the business is headed – Digital • Working to fund new innovation through Iris Next One • Smallest player out of the “Big Three” • Still working on expanding it’s reach while top two are already there • Significant changes to media landscape • Clients are cutting media investments • Boutique agencies that can do similar work for less are becoming a trend • Publicis exposure to Digital Expansion • Sapient opening opportunities with Facebook, Yahoo and Google • Business expansion in India • Venture Capital new business opportunities SWOT Strengths Weaknesses OpportunitiesThreats
- 54. • Havas wasfounded in 1835 and is headquartered in France • Operating in over 100 countries • Employing 16,000 people OVERVIEW
- 55. To be theworld’s best company at creating meaningful connections between people and brands through creativity, media and innovation. CORPORATE PHILOS0PHY MISSION
- 56. The Havas group'ssix commitments to progress • To reduce the environmental footprint of our operations • To reduce the environmental impact of our communication campaigns • To promote diversity and expand health insurance and employee benefits internationally • To apply more exacting social and human rights criteria to ensure more responsible purchasing of products and services • To promote transparency and ethics in our industry • To promote a model of communications more conducive to sustainable development . VISION
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- 58. Innovation Building an extremelypowerful offering in terms of technology, data, performance measurement tools and content creation External Growth Maximizing value creation for the Group's clients, talents and shareholders. Looking in particular for agencies in order to meet the needs of its clients in terms of knowhow or geographic coverage Social Responsibility “Meaningful Brands” Non-profit and non-governmental organizations in 2015 STRATEGY
- 59. • Revenue of€1,865 million in 2014, with an organic growth of 5.1%. • Revenue for the first quarter of 2015 was € 469 millions with an organic growth of 7.1% REVENUE
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- 65. SWOT • Barriers ofmarket entry • Domestic market • Skilled workforce • Competitive market • R&D development • Interest rate, exchange risk on foreign currencies • Future debt rating • Growing economy • New acquisitions • Increasing costs • Government regulations Strengths Weaknesses OpportunitiesThreats
- 66. CONCLUSION All 3 companiesare rated strong Poised to serve the emerging growing Digital Domain Dentsu: “Good Innovation” PUBLICIS: “Headed Digital” HAVAS: “Meaningful Brand”
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Editor's Notes
- #20 including mass media advertising services such as media planning, creative execution and various marketing and sales promotional activities
- #22 they want to expand their gross profits internationally by using their unique operating model. this model enables Dentsu to provide a collaborative, integrated and specialist services for their clients across markets and regions the company is trying to expand its profits outside of japan(could show chart) show graph and the growth of the regions outside of japan to expand their digital domain they made 11 acquisitions in year 2014 will continue to. they are committed to improving their digital domain with an aggressive acquisition strategy show graph of their operating margin